- The Washington Times - Tuesday, January 7, 2003

NEW YORK (AP) Investors' anticipation of a tax cut re-ignited the New Year's rally on Wall Street yesterday, sending stocks higher and lifting the Dow Jones Industrial Average more than 170 points.
Wall Street expected President Bush, who is scheduled to announce an economic-stimulus package today, to propose a cut in taxes on dividends to encourage more investment and give consumers more cash to spend.
"That is certain to be a big boost to the stock market," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
The Dow closed up 172, or 2 percent, at 8,774. The Dow claimed its second triple-digit win in three sessions, having surged 266 Thursday on an unexpected jump in the manufacturing sector.
The first three days of 2003 have given the Dow its second-best start to a new year with a gain of 5.2 percent, according to Markethistory.com, a financial-research Web site. The Dow had its best three-day New Year's rally in 1938 when it climbed 7 percent.
The broader market also rallied. The Nasdaq Composite Index rose 34.24, or 2.5 percent, to 1,421. The Standard & Poor's 500 Index advanced 20.42, or 2.3 percent, to 929.
Stocks that pay dividends, particularly big-name blue chips, were among yesterday's winners. IBM rose $1.94 to $83.59 and ExxonMobil advanced 88 cents to $36.38.
Chip-equipment makers contributed to the tech sector's gains after an upgrade by Deutsche Securities. Novellus soared $2.37 to $33.57 and Applied Materials climbed 88 cents to $15.41.
Other issues managed to rise despite negative news, an indication of how energized investors were feeling. Biogen advanced 45 cents to $41.85 despite a downgrade from Salomon Smith Barney.
Analysts also credited Wall Street's advance to an upbeat outlook for fourth-quarter earnings, which companies begin releasing in earnest in two weeks.
"There has been a shortage of reductions in fourth-quarter [profit] expectations so far and a lot of people had anticipated a lot more," said Ned Riley, chief investment strategist at State Street Global Advisors.
The gains also came after an economic report from the Institute of Supply Management. The group reported that its index of non-manufacturing business activity stood at 54.7 in December, down from 57.4 in November and below analysts' expected reading of 55. Still, a number above 50 indicates expansion in business.
Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange. Consolidated trading volume was moderate at 1.80 billion shares, up from 1.41 billion Friday.
The Russell 2000 Index, which tracks smaller-company stocks, rose 6.69, or 1.7 percent, to 397.00.
Overseas, Japan's Nikkei stock average finished yesterday up 1.6 percent. In Europe, France's CAC-40 rose 0.7 percent, Britain's FTSE 100 slipped 0.1 percent and Germany's DAX Index climbed 2.1 percent.

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